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August 6th, 2012
By FREDRIC U. DICKER
Gov. Cuomo and state Comptroller Thomas DiNapoli are reviewing proposals for a “super control board’’ that could take over the finances of counties, cities and towns on the verge of bankruptcy, The Post has learned.
Such sweeping legislation is bitterly opposed by public-employee unions because it would grant authority to the control board — under the most severe conditions — to break union contracts that have been the main source of runaway local spending, sources said.
The legislation is under review at a time when DiNapoli is warning that dozens of New York communities face fiscal calamity because of declining revenues and real-estate values and runaway pension and health-care costs.
The problem is nationwide. Last week, San Bernadino became the third California city in recent weeks to file for federal bankruptcy protection.
Last month, the State Budget Crisis Task Force, led by former Lt. Gov. Richard Ravitch and former Federal Reserve Chairman Paul Volcker, warned that the “existing trajectory of state spending, taxation and administrative practices cannot be sustained.’’
New York governments are among the worst off, since they engage in some of the highest per-capita spending and taxing.
Cuomo’s office has drafted one version of the proposed legislation that would create a super control board patterned on the Emergency Financial Control Board that was created to help deal with the New York City fiscal crisis in 1975.
Similar control boards have been put in place in recent years in Buffalo, Troy, Yonkers and, most recently, Nassau County.
A key purpose of the proposal is to avoid the need for a piecemeal approach to control-board creation should several communities fall into crisis at once.
But the legislation has yet to be submitted to the Legislature because of nervousness on the part of lawmakers fearful of union resistance and their desire to make sure the affected local communities would have representation on the new board. Democrat DiNapoli, who owes his election to an all-out effort by public-employee unions, was described as especially fearful of bucking union power.
“Our guys are looking at it, but the challenge is that no one size fits all,’’ said a DiNapoli spokesperson.
DiNapoli, in a report last week, noted that 300 local governments ran deficits in 2010 and 2011 and that more than 100 of them now have inadequate cash on hand to pay their current bills.
What’s more, the report noted that eight local governments, including New York City, are “dangerously close’’ to exceeding their constitutional tax limit, which ties the amount of money a local government can spend to a percentage of its property-tax value.
Other communities approaching spending limits include Binghamton, Jamestown, Lackawanna, Herkimer and Cortland County.
Among communities considered by DiNapoli to be in the greatest immediate fiscal danger are Rockland County and the long-troubled city of Newburgh, in neighboring Orange County.
“We could be heading for a real catastrophe for local governments in New York, especially if there’s an unexpected collapse in Europe or if this country goes into another recession,’’ one of the state’s leading fiscal experts told The Post.
The proposed new super control board would have the power to take over the finances of local governments on the verge of bankruptcy and cut costs where necessary.
It wouldn’t completely replace the locally elected officials. But it would provide them with the political “cover’’ many privately say they need to stand up to the powerful unions, which have consistently resisted spending cuts.